Shell South African Shale Drive Riles Farmers Over Water: Energy

Royal Dutch Shell Plc shale gas drilling plans for South Africaâ€™s Karoo semi-desert are pitting the government and its energy goals against farmers and conservationists like billionaire Johann Rupert who say the land will be spoiled.

Royal Dutch Shell Plc (RDSA)â€™s shale gas drilling plans for South Africaâ€™s Karoo semi-desert are pitting the government and its energy goals against farmers and conservationists like billionaire Johann Rupert who say the land will be spoiled.

The government estimates enough gas can be discovered to generate 1 trillion rand ($100 billion) of sales within three decades and help bring a country that imports 70 percent of its crude oil needs closer to supplying its own energy demand. Landowners are lining up against the water-intensive drilling techniques that Europeâ€™s biggest oil company intends to use.

â€œPeople donâ€™t see what will happen,â€ Izak van der Merwe, a 59-year old sheep farmer, said as he sipped a beer while walking down a line of freshly slain antelope at the Murraysburg Hunting Competition, 620 kilometers (385 miles) northeast of Cape Town. â€œThe people at Shell donâ€™t realize the kind of ecosystem we have.â€

At stake is a government drive to cut an unemployment rate thatâ€™s higher than the national average of 25.6 percent in Karoo, an arid area the size of the U.S. state of Montana with little economic activity. The shale industry could be a â€œgame changerâ€ for the economy, Trade Minister Rob Davies said in parliament on Aug. 22. Exploration regulations may be passed by the end of the current governmentâ€™s term in April next year.

South Africaâ€™s shale reserves, concentrated in the Karoo, could be the worldâ€™s eighth-biggest behind countries like China, where Shell plans to invest in the industry, and the U.S., where itâ€™s already producing the gas, the U.S. Energy Information Administration said in June.

3,000 Landowners

Gas is more efficiently pumped from shale using hydraulic fracturing, or fracking, where pressurized water, chemicals and sand are injected underground to shatter rock and release the fuel thatâ€™s trapped.

Opponents including Douglas Stern, a member of Agri Eastern Cape, representing more than 3,000 landowners in the province, say fracking could cause pollution, threatening the Karoo. The region covers about a third of South Africa, with its landscape of sparse grass and shrubs supported by annual rainfall that can be less than four inches, drier than Californiaâ€™s Mojave desert. South Africa as a whole averages about 18 inches of rainfall a year, according to the government.

â€œWeâ€™re going to be polluting our water,â€ Stern said in an interview.

Farmers like van der Merwe, who owns 3,200 sheep, fear that the drilling could end the lifestyle that some of their families have had for more than a century.

Wool, Ostrich Meat

As one of the least-populated areas in the country, the Karoo produces most of South Africaâ€™s wool and accounts for the bulk of the countryâ€™s mohair output, export industries worth about $330 million. Buyers include luxury suit-maker Ermenegildo Zegna SpA. The region also produces sheep and ostrich meat.

Rupert, whose controlling stake in luxury goods-maker Cie. Financiere Richemont AG accounts for two thirds of his $8.4 billion fortune, owns land in the area and is â€œvery actively involved in opposition to fracking,â€ Derek Light of Graaff-Reinet-based Derek Light Attorneys, representing the billionaire and 400 landowners, said by phone. Rupert didnâ€™t respond to requests for an interview.

â€œThere will be pollution causing a loss of air quality and potential contamination of groundwater,â€ Light said in an e-mail. â€œThese activities will impact negatively on agriculture and undermine food securityâ€ and tourism will be damaged, he said.

Shell plans to bring in water from sources including the sea in â€œthe initial explorationâ€ period, and â€œlocal expertsâ€ will be consulted prior drilling each well, it said on its website. Shell has said it wonâ€™t compete with local communities for fresh water, and that farmers may benefit from exploration.

Fair Compensation

â€œThere will be fair compensation for land owners, the land and the crops, and then there will be jobs for local communities,â€ Claude Vanqa, Shellâ€™s community relations representative in the Karoo, told government officials May 23 in Fraserburg in the Northern Cape province.

Shale gas could generate as many as 700,000 jobs in South Africa, according to Shell, which cited a study by Johannesburg-based Econometrix.

Vanqa, who grew up in Beaufort West, in the Karoo about 400 kilometers northeast of Cape Town, has crisscrossed Shellâ€™s 90,000-square kilometer lease area to make presentations to its 17 municipalities.

â€œWe hope to be granted an exploration right within months,â€ Janine Nel, a spokeswoman for the Hague-based company, said by e-mail.

Best Practices

â€œThe inter-departmental task team to establish best practices for hydraulic fracturing hasnâ€™t finished their work,â€ Trevor Hattingh, a spokesman for the Department of Mineral Resources, said by text message.

Minister Susan Shabangu is â€œin favor of the opportunities it can unlockâ€ and considerate of its impact on society and the environment, he said.

Falcon Oil & Gas Ltd. (FO), which was granted a technical cooperation permit in 2009 for 30,000 square kilometers and has a partnership with Chevron Corp. (CVX:US), is also waiting for permits. Bundu Oil & Gas Exploration Pty Ltd., owned by Melbourne-based Challenger Energy, has an application for about 4,144 square kilometers.

Production could start within 10 years, adding to energy options in South Africa which relies on coal-fired plants for 85 percent of its 41,900 megawatts of installed electricity capacity. Sasol Ltd. (SOL), based in Johannesburg, supplies more than a fifth of the countryâ€™s motor fuel by processing coal.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at [email protected]

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singapore love: Rumor on the street is the Shell Vito project is over a year behind schedule, AND Shell plans to double down and award Whale to the same contractors in the coming weeks.
Must be some serious love going on between the Singaporeans and Shell decision makers....

Bonus Group: To uscitizen,
BRAZIL:
'PS - Shell is investing 2 billion a year into Brazil and already paying off'. Assuming $2Bn (you did not quote currency), that would just about cover Shell's share of the costs of replicants, operating expenses and of course managers' BONUSES!
$2Bn would represent approximately 10% of Shell's income in 2018.
https://reports.shell.com/annual-report/2018/consolidated-financial-statements/statement-of-cash-flows.php
FPSO unit cost: our initial case ($91bn total capex) assumed a cost of $2.5 billion for each of 13 FPSO units. However, our research shows a wide range of possibilities for this cost depending on the vessel configuration; plus the fact that Brazilian shipyards should get better at building them so the cost could reduce over time. Also the project might choose to lease rather than buy the FPSOs outright, which could improve economics for the consortium depending on the lease terms.
http://openoil.net/wp/wp-content/uploads/2016/12/OO_br_Libra_narrative_1.0_161104.pdf

uscitizen: Bonus group, Contradict myself - lol. Poor guy - like I said do your own research - tell us what you find, you will look like the irrational uneducated poster you are. PS - Shell is investing 2 billion a year into Brazil and already paying off. Do you ever look anything up?

Bonus Group: To US Citizen. Thank you for your post of September 9th 2019 20:12. Congratulations on also being an avid reader of this blog. You are correct in my post of June 26th 2019 23:05 I did say that '..Shell had a ‘fire sale’ of a plethora of BG ‘dross’ assets in order to raise $30Bn to disguise the amount by which they had overpaid for BG Group.' More correctly, Shell had a ‘fire sale’ including a plethora of BG ‘dross’ assets in order to raise $30Bn to disguise the amount by which they had overpaid for BG Group. This does not detract from the fact that Shell did have a 'fire sale' in order to raise $30Bn. By my estimation Shell over paid for BG Group by about 30%. The Christmas boxes were very large, but the presents were very small. You contradict yourself when you say that you will not do my homework for me, but then tell me that the split of the $30Bn assets sold was 80:20 Shell:BG. Is that correct? If so, thank you that just goes to show how worthless those BG assets were, but then that is what you can expect from a Cappuccino and Belgian chocolate lifestyle company. Any comments about what the Brazil Asset are up to these days?

uscitizen: To Bonus Group - the large percentage of assets sold by Shell were non BG assets. I will not do your homework for you, but the split is 80/20. A great example of why you do not take what this sites protagonists post as good information. But go ahead, say I am wrong and also posting garbage, do your research and tell me the number of BG asset sales vs the 30 billion Shell raised thru asset sales.

John Donovan: MESSAGE FROM JOHN FOR THE ATTENTION OF BOGUS GROUP. I have received the information you kindly sent and have replied by encrypted email.

Bill Campbell Prelude Comment: I might write in more detail but I find it rather ironic that it was this website that was telling the world 6 or so years ago that this installation did not have risk levels as low as claimed and one of the principal risk drivers was the compact nature of a hazardous substances plant with not enough space to swing a cat in. Unless you are not aware I wrote to Shell Australia at the time giving them data from 8 existing or planned onshore LNG plants which varied from 80 to 100 hectares or on average 20 to 22 times the footprint of Prelude, could they tell me as a stakeholder with shares in the Company how they arrived at their ridiculously low number but can guess I assume that a reasonable explanatory reply was not forthcoming, as sure as eggs are eggs if this plant is currently having problems or if it has problems or major accident events in future it will be due to the force fitting a complex plant, with risk levels much above which they have published, on a postage stamp of a footprint.
God willing they will never live to regret their fraudulent overly optimistic claims, risk is based on reality not wishful thinking.
Bill

Thanks. Problem is that it's behind a paywall and despite it being a great publication for the oil industry, none of us retired folk wants to invest in a subscription.

FURTHER REPLY FROM JOHN

I have received the further Prelude information you have kindly provided and have replied by encripted email.

Bonus Group: Further to Bogus Group's post yesterday. I am absolutely appalled that a Senior Executive of Royal Dutch Shell plc should spout so much nonsense concerning the Prelude installation. The statement is redolent of Malcolm Brinded and his 'Touch F*ck All' policy, which led to the deaths of Keith Moncrieff and Sean McCue on Brent Bravo on 11th September 2003. What is boring is the continuous misleading spin and blather from the top of this company and their lackadaisical approach to safety. 'Chronic Unease' is a well known expression in the Oil and Gas Industry, and that state of mind is far from boring or routine. In fact nothing is either boring or routine in Oil and Gas operations. Rob Jager moved last year to the post of VP Prelude after spending thirteen years as Country Chair and VP for Shell New Zealand/Shell Taranaki, after Shell announced the sale of its New Zealand interests in March 2018. Jager clearly previously has spent too much time being 'laid back' in the fantasy land of Lord of the Rings, marvelling at New Zealand's scenery and wondering who will be entertaining him for his next luxury seafood dinner accompanied by a glass of chilled expensive New Zealand Sauvignon Blanc.

Bogus Group: PLEASE SEE REPLY FROM JOHN WHICH FOLLOWS THE COMMENT FROM BOGUS GROUP
More on Prelude article in Upstream.

I’m stunned by what can only be described as idiotic statements. Nothing like the utopia of self-aggrandisement without verification. What is Jagers’ level of technical and operational capabilities? I recall similar rhetoric from BG Group charlatans, with the “best in class” mentality and use of the most overstated expression ever to be used outside the education sector, all aimed at pleasing their taskmasters.
Ramp-up of Prelude and what Jager hopes will be decades of “uneventful” and “boring” operation.
“This will be a state where little or nothing happens. We have few if any alarms, no surprises and where things are running like clock work and we are effectively in autopilot,” he said.
“We will know when we have succeeded in this ambition because Prelude will be recognised as the most boring asset in Shell global portfolio our people will refer to it as the safest and most desirable place to work, and when the rest of the industry is knocking on our door to find out how we have achieved such a best in class outcome, especially for a facility as complex and unique as Prelude.”

REPLY FROM JOHN

Hello, I would be grateful if you could send me a copy of the article via [email protected] using an anonymous email address. I would pass it on to retired Shell EP experts for their assessment.

FG names Shell, Eni executives in $1bn bribery case – The Punch08 May 2019 11:43Google’Femi Asu with agency report
Royal Dutch Shell Plc and Eni SpA face additional corruption allegations over a Nigerian oil deal, after the Federal Government said in a London lawsuit that it believed a handful of executives, including Chief Executive …

FG names Shell, Eni executives in $1bn bribery case08 May 2019 08:09Punch Newspapers’Femi Asu with agency report
Royal Dutch Shell Plc and Eni SpA face additional corruption allegations over a Nigerian oil deal, after the Federal Government said in a London lawsuit that it believed a handful of executives, including Chief Executive …

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